2 best stocks that get hammered after hours

The stock market started September with mixed performance for the major indices as many investors eagerly awaited the employment data expected on Friday to give a hint on the future direction of the market. The Nasdaq Composite (NASDAQINDEX: ^ IXIC) managed to climb to another record, but the S&P 500 (SNPINDEX: ^ GSPC) was roughly unchanged, and the Dow Jones Industrial Average (DJINDICES: ^ DJI) effectively ceded ground.

Data source: Yahoo! Finance.

The string of high-profile earnings reports continued after the market closed on Wednesday, and some stocks were hit hard despite companies offering relatively strong results. Among the big drops the day after hours were soft (NYSE: WHO) and Veeva Systems (NYSE: VEEV). Below, we’ll take a look at the two companies and their latest reports to see if there is a reason for the stock price to fall.

Every dog ​​could have his day – but not today

Chewy announced its second quarter results after the bell on Wednesday. The pet retailer’s inventory fell quickly, down 9% as of 5:30 p.m. EDT.

Chewy’s numbers didn’t seem to deserve such a negative reaction. Revenue increased at a 27% year-over-year rate to $ 2.16 billion. Gross margin figures increased by 2 percentage points. Chewy saw the number of active customers increase by 21% from last year’s levels to over 20 million, and average sales per active customer rose 13% in the same period to over 400 $. Chewy recorded a modest loss, but free cash flow turned positive after a substantial negative the previous year.

Image source: Getty Images.

Still, investors reacted badly to some of the issues Chewy continued to face. Out-of-stock items remained at high levels during the period, although the situation improved somewhat compared to three months ago, with supply chain issues improving in some cases. . Additionally, production capacity issues continued to plague Chewy in key areas such as wet dog food sales.

Nonetheless, Chewy is excited about his growth opportunities. In particular, the launch of the Chewy Health Veterinary Market on the company’s website aims to provide an alternative to some of the pet-focused websites that competitors have spawned, instead of linking directly to thousands of veterinary clinics to enhance the value of the Chewy ecosystem. Combine this with favorable trends in pet ownership, and it makes it easier to see the after-hours decline as a market opportunity.

Veeva looks less lively

Veeva Systems stock saw similar declines, falling nearly 9% in after-hours trading. The cloud solutions provider for the life sciences was unable to meet the high expectations of its shareholders in its second quarter results.

Veeva had a lot of good things to say about the past quarter. Overall revenue climbed 29%, closely following the increase in sales of subscription services. Adjusted net income rose 31% year-over-year to $ 152.7 million, and adjusted earnings of $ 0.94 per share was higher than most investors expected from the cloud action.

Still, investors didn’t seem happy with Veeva’s vision for its immediate future. The company forecast third-quarter sales of between $ 464 million and $ 466 million and earnings of $ 0.87 to $ 0.88 per share, which were only slightly above expectations. Likewise, a full-year sales forecast of $ 1.83 billion to $ 1.835 billion would represent growth rates of only 25%, and adjusted earnings projections of $ 3.57 per share would still leave the multiple of stock earnings above 90 before the after-hours decline.

Even with the drop, Veeva is still up 20% since May. If the life sciences industry shows renewed growth, it could help Veeva’s stock recover.